Scotland business

Lloyds to pay £140m to Standard Life Aberdeen after feud settled

Lloyds Banking Group Image copyright Getty

Two of Scotland's big finance companies have settled a feud over the management of more than £100bn of assets.

Lloyds Banking Group is to pay £140m to Standard Life Aberdeen, after going to an arbitration tribunal.

The settlement follows a row over Lloyds' decision to withdraw £109bn of assets that was being managed by Standard Life Aberdeen.

The two sides clashed over contractual obligations to remain with that asset management contract until 2022.

Scottish Widows, which is owned by Lloyds Banking Group, placed funds with Aberdeen Asset Management, before its merger in 2017 with Standard Life.

The bank claimed that merger meant the combined company would be in competition on insurance products with Lloyds Banking Group.

Rather than support a competitor company, Lloyds announced in February 2018 that it would withdraw the funds.

The decision of arbitrators, announced last March, favoured Standard Life Aberdeen.

'Fair and positive outcome'

The detailed settlement, announced on Wednesday, sees a third of the funds - recently valued at £35bn - retained by Standard Life Aberdeen at least until April 2022.

Those are the passive funds, which are less valuable in terms of fees paid, as well as £5bn in real estate assets.

The company said it would still work with BlackRock, which had won the mandates to manage Scottish Widows funds, subject to the arbitration decision.

Two-thirds of the funds will still transfer to Schroeder Wealth, a joint venture between Schroeder and Lloyds.

The £140m payment is in lieu of the loss of profits to Standard Life Aberdeen as a result of two-thirds of the funds being withdrawn.

Keith Skeoch, chief executive of Standard Life Aberdeen, said the settlement "represents a fair and positive outcome for both parties".

He added: "We look forward to building on our relationship with Lloyds Banking Group and continuing to deliver positive outcomes for their customers.

"The retention of assets in our passive strategies [tracker funds] as well as active real estate portfolios positions us to benefit from scale and growth in these growing parts of the asset management industry."

A Scottish Widows spokeswoman said: "We are pleased to have been able to reach agreement with Standard Life Aberdeen.

"We will continue to work closely with SLA to ensure there is no disruption to performance or service as we begin the process of an orderly transfer of assets to our new partners.

"There will be no immediate changes for our customers and we'll keep them updated throughout this process."